Over the past decade, the federal government has taken significant steps to encourage the development of...

Over the past decade, the federal government has taken significant steps to encourage the development of ethanol and other fuels made from plants as a partial replacement for gasoline. These actions have been undertaken by politicians in the midst of public concerns about the dependence on foreign oil, war in the Middle East, and global warming. The primary input for ethanol production is corn. In 2011, the 13.9 billion gallons of ethanol produced in the United States consumed over 20 percent of the domestic corn supply. Suppose that the government has just passed new legislation mandating increased annual pro- duction of corn ethanol. You manage the Hog Heaven restaurant chain. Your restaurant chain, which has about 300 outlets throughout the United States, specializes in barbecue pork dishes but also offers chicken, beef, and vegetarian meals. Currently about 80 percent of your revenue comes from your pork dishes. The price of pork has a major impact on your costs. You are concerned that the federal promotion of ethanol might have an impact on pork prices and the profitability of your restaurant chain. Feed cost is typically about 50 to 60 percent of the total cost of production of pork producers. About 80 percent of the feed that hogs consume is corn.

Use basic supply and demand analysis to illustrate the likely effect of the government’s man- dated increase of ethanol production on (1) corn prices and (2) pork prices and What actions might you consider given the results of your analysis?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

The rate of entrepreneurship has been growing steadily in the United States over the past decade....

The rate of entrepreneurship has been growing steadily in the United States over the past decade. The reasons behind this increase are varied. Most of the people starting a business seek a combination of greater financial success, independence, flexibility, and challenge. Owning a business holds appealing benefits for entrepreneurs like being their own boss, having control over their schedule, and facing new challenges. Almost every entrepreneur starts out as a small businessperson but not every small businessperson starts out as...

The healthcare industry is ever changing, but over the past decade, it has changed even more...

The healthcare industry is ever changing, but over the past decade, it has changed even more rapidly than we could have ever imagined, especially over the last few months. Based on this, fill in the blanks in the grid, and summarize a minimum of two changes per category, discussing what changes have taken and may take place in the world and health care for the defined timeline. What changes have taken place (2015 through today) Speculate on possible future changes...

Marketing research over the internet has increased significantly in the past decade. Outline the strengths and...

Marketing research over the internet has increased significantly in the past decade. Outline the strengths and weaknesses of marketing research conducted online

Which external condition has experienced the most rapid change over the past decade?

(a) Over the past decade, some of Japanese savings has been used to purchase large amounts...

(a) Over the past decade, some of Japanese savings has been used to purchase large amounts of U.S. financial assets (typically U.S. government bonds). Suppose Japan suddenly stopped purchasing U.S. financial assets. Graphically illustrate the effect of Japan’s reduction in purchases of U.S. financial assets using the Open Economy model developed in the Ch 6 appendix. (Hint: In your model you will need to draw three diagrams). Clearly label the axes and curves in each of your graphs in the...

Healthcare Policy in the United States has been largely consumed over almost the past decade by...

Healthcare Policy in the United States has been largely consumed over almost the past decade by Affordable Care Act. Why does universal access to healthcare continue to be debated in the United States, and in what ways is this discussion different from the healthcare discussion in other countries?

The cost of producing flat-screen TVs has fallen over the past decade. If demand remains the...

The cost of producing flat-screen TVs has fallen over the past decade. If demand remains the same, what happens to equilibrium price and quantity? What happens to consumer surplus? What happens to producer surplus?

1 Over the past decade, there has been a strong positive correlation between teacher salaries and...

1 Over the past decade, there has been a strong positive correlation between teacher salaries and prescription drug cost. (a) Do you think paying teachers more causes prescription drugs to cost more? Explain. (b) What lurking variable might be causing the increase in one or both of the variables? Explain. 2 When we use a least-squares line to predict y values for x values beyond the range of x values found in the data, are we extrapolating or interpolating? Are...

What are the procedures and steps taken by Qatar to encourage foreign direct investment?

Our federal and state governments' debt has significantly increased over the last decade and unfortunately, it...

Our federal and state governments' debt has significantly increased over the last decade and unfortunately, it is projected to grow even larger. Sooner or later, this debt will be paid by taxpayers and so long as we have this debt, we will continue to pay hundreds of billions of dollars of interest on it. Are you concerned that this debt will eventually erode economic growth and we will have lower living standards? How do you think that our elected officials...

Subjects